The UK’s Post Brexit Beer Dilemma

The fallout from the United Kingdom’s decision to leave the European Union, or Brexit as it’s become more commonly known, has generated of several aftereffects for UK brewers and left them with a future that remains largely unknown…

First the good news…

Brexit was a surprise and a shock for many who assumed the United Kingdom would never vote to leave the European Union and the free trading advantages that came with it.

But one surprising aftereffect was a weakened pound that has in turn made UK goods such as beer more attractive and lead to an explosion UK food and drink exports.

A report Brits Abroad: UK Food & Drink Exports in 2018 — found that the export of goods had risen by 12% in the year to November 2017, with alcoholic drinks exports seeing the most growth at 16%.

The late November 2017 report claimed that “an inescapable fact remains that the EU referendum result has led to an explosion in exports, due in no small part to the weaker pound.”

Now the bad news or maybe just the unknown news …

England is now trying to negotiate its way out of Brexit in a way that will minimize the free-trade advantages it enjoyed as part of the European Union.

It’s a political process with an unclear outcome and the negations can get ugly…

And as we’ve explained thanks to the weekend pound, UK brewers have been enjoying an export boon. But that all could come to an end once tariffs with Europe are imposed according to The Week…

“While it is a member of the European Union, Britain is part of what is called the customs union, meaning it enjoys the benefits of trade liberalization – namely, the easy transit of goods across national borders.”

“If the UK leaves the customs union – an outcome looking more likely as the idea of a “hard” or “no-deal” Brexit takes hold – then it will lose the benefits of free trade and it will instantly become much more difficult for goods to travel.”

And the economics of the UK’s beer industry in a post-Brexit world are further complicated by England’s import/export dynamics…

A recent report, which examines the overall production, sales and consumption of beer in Europe, found that, while Britain is home to the most breweries of any country in the region, brewing 10% of all of Europe’s beer, the UK also buys in the most beer from overseas, the vast majority of which comes from Europe…..

The report comes as beer sales rose by 4.4% in the UK this year, according to the recently published British Beer and Pub Association (BBPA) annual Beer Barometer report…

According to the BBP, off-trade sales (read: grocery and liquor store sales) rose by more than 7%. And in spite of the UK’s declining pub crisis on-trade beer sales saw its first rise in more than 15 years.

“Obviously we were helped by the good weather,” Brigid Simmonds, head of the BBPA, told the Drinks Business “but I do believe this is a positive sign for UK pubs.”

But Simmonds did warn that Britain’s brewers and pub owners need “greater certainty” from the government ahead of its departure from the European Union…

“Clarity on the transition period from March 29th onwards and a strong steer on the future relationship with the EU would be a boost to the trade and beer sales.”